Greece Without Illusions

Greek Prime Minister Alexis Tsipras understands that his freshly reelected government is skating on the thin ice of a fiscal program that cannot succeed and a "reform" agenda that his ministers loathe. With the reality of further austerity measures set to test voters' patience, does Tsipras have any room for maneuver?

ATHENS – “The costliest minor government reshuffle in Greece’s history.” That is at least one way to describe the result of the Greek general election on September 20. Indeed, with few exceptions, the same ministers have returned to the same offices as part of an administration backed by the same odd pair of parties (the left-wing Syriza and the smaller right-wing Independent Greeks), which received only a slightly lower share of the vote than the previous administration.

But the appearance of continuity is misleading. While the percentage of voters backing the government is relatively unchanged, 0.6 million of the 6.1 million Greeks who voted in the July 5 referendum on continued “extend-and-pretend” loans with stringent austerity strings attached did not turn out. The loss of so many voters in little more than two months reflects the electorate’s dramatic change in mood – from passionate to glum.

The shift reflects the mandate that Prime Minister Alexis Tsipras sought and gained. Last January, when I stood with him, we asked voters to back our determination to end the “extend-and-pretend” bailouts that had pushed Greece into a black hole and operated as the template for austerity policies across Europe. The government that was returned on September 20 has the opposite mandate: to implement an “extend-and-pretend” bailout program – indeed, the most toxic variant ever.

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After WWII, Europe, including Greece, has a conference and wrote down Germany's debt by 60%, and allowed them time to pay off the remainder; thus was born "the German Economic Miracle". Why not do the same for Greece, now, as well as other European countries?

Don't they ever learn? By squeezing tomorrow's euros out of the Greek populace today through a pay-forward tax system, these citizens today will have near-empty wallets to sustain whatever little of business and industry remains in Greece. This is a formula for full economic implosion. Why would Germany do this? Why emasculate an entire country at the groin of Europe?

{we asked voters to back our determination to end the “extend-and-pretend” bailouts that had pushed Greece into a black hole and operated as the template for austerity policies across Europe.}

Enough is enougy, Varoufakis.

It's been decades since Greece has flaunted all the rules of decency in formulating first a country without a great deal of resources (other than Tourism and Mercantile Services) with which to dynamize an economy.

And even then, it has government expenditures that are so sky-high due to over-stuffing with jobs that could be more effectively done in the private sector, that it has persistent deficits.

So, it had to go to Goldman Sachs to hide that deficit an lie its way in to the EuroZone in 2001. And ever since it has been living off the same debt-extensions from the EU.

That had to stop and Greek politicians should have known it has to stop, and implemented the necessary measures to take Greece off the Euro- transfusion line. But, no, various governments, envious to stay in power simply pushed off the inevitable - which has happened.

There is no indication whatsoever that Greece wants to take the measures necessary to (1) cut the budget by putting out government employees (the hard part), or change its constitution to tax Greek company profit revenues from abroad, or put a proper VAT-collection system in place to prevent avoidance by using cash-for-transactions in commerce.

Or cut the military budget for an Army/Nave it does no need since it is already a member of Nato.

Or, or, or - the list is long .

All we get is the mouthing of the "Austerity Argument" - which simply means Greece wants complete or near-complete Debt Forgiveness.

Aint gonna happin, Yanis ... Greece has to learn how to "grow up" into the middling-type economy that it is and will likely remain.

Unless, it can stimulate the petroleum/gas reserves that exist just offshore that are obtainable from onshore with modern equipment. Just then, Greece might have the sort of revenue that would help. But, unlike before, the prices obtained will for the product will not likely be as a good as before ...

I hardly ever say never ... but this program can hardly fail to fail. Whether it collapses under its own collisions with reality, or is drowned under a tsunami of global failure, will be both amusing and instructive to see.

Demanding prepayment of 2017 taxes, in 2016, will lead to nothing but very effective passive resistance, in the form of dragged-out payment, with those who could pay, and nonpayment, by those who can't. There is zero incentive for the people on the productive end of the economy, to produce at even current levels, let alone increased. I've lived and worked in Greece, and know people's mindset on this, even in far better times than now. Very clearly, the main point of hamstringing Greece in this way is political, not financial. Exactly what results at that level will be fascinating to watch, too. Ultimately, a strong right-wing revolt? Not that it'd solve anything. There appears to be no rational exit. God help the working Greek people. Nobody else appears interested in doing so.

And regulators setting the capital requirements also look at the same perceived credit risks.

Twice considering perceived credit risk, is like adding up the risk adverseness of two nannies… meaning the kids will never be allowed to play outside.

It means that banks will lend too much to those perceived safe (making them dangerous in the process) and too little to The Risky, like the SMEs and entrepreneurs Greece needs to activate to get out of its hole.

That of course does not mean, that IMF’s proposed haircut would not be necessary.

The high taxes Varoufakis is writing about are long due for Greeks.
We remind him that high VAT is paid by every customer and tax contributors
in EU,as well as high income tax.The Greeks cannot live in a "no tax"paradise
and get all the benefits from EU.

Well, we are ready to do some serious sustainable economic development...just have not found the group at the other side to proceed.....Whether it happens from our readers contacting us or by itself...I am all for it. Thank you.

Sound investments must be based on sound economics. Is it sound to ask the tax payers (albeit individuals or corporations) to pay taxes 1 or 2 years in advance and this in addition to their current and past tax commitments? This is pure insanity.

As an American born Hellene of Grandparents arriving America in 1908 from the Peloponnese (Sparti) and who worked diligently to create family and a place in America as immigrants from Europe, my pledge to the United States of America, our beloved Republic who has been there to assist the oppressed and now held hostage by the likes of a Chicago city street slicker and nothing more who Putin and his bosses see for what Barry and Michelle Obama are without any doubt, Barry Obama and Michelle along with the good 'ol Ms. Hillary and Billy Boy, all lusting with self-e interests and giving not a hoot about our Judeo-Christian principles and our Constitution and Rights of the individual like no other in the history of mankind, Tsipras and the EU Ministers and the bankers are all manipulating my esteemed fellow Hellenes whose overall economy expense in the EU budget is some 2% only and this is all a charade much like this staged "Chicago-Hollywood-Washington charade" where we have "entrusted" by precious vote elected officials who have abused their privilege afforded by the People and have had no intent on upholding their pledge on the Bible!

We folks whether on "Main Street USA" or throughout Europe are in much jeopardy by the outright corruption of politicians and Greece being used as a pawn to eventually dismiss all in the EU except for ten (10) EU states and that's it and all to be led by none other than a Hapsburg, Karl Guttenberg who will take the torch from Merkel and while Tehran and the Russians form their allegiance and soon India as well in the alliance as well as China, wake up folks for we are headed for War and much conflagration unless we see our politicians, the lackluster to none in leadership other than to their own coffers...unless we see these corrupt folks repent and given that while Department of Homeland Security and this Chicago city street slicker allows convicted felons to roam the streets among us and despite every failed attempt to take our armed person away from us for which we hold our guns high and for all lawful purpose...and we see barry fly quickly to Cairo to "apologize" and spew his empty rhetoric and could given a damn really about the precious Black youth in Chicago and Baltimore being killed by their own in neighborhood after neighborhood and Barry and Michelle having never visited Chicago or any other responsible politician and a Chicago with the strictest of gun laws so folks never mind Hellas, We together see recession and even depression ahead and War looming so take your Bible and say your prayers and demand accountability and transparency by those we elect by precious vote as we are being deceived by the very same who pledge with hand on Bible! How dare they?

YV - You forgot to highlight that the ROOT CAUSE of 'Greece Problem ' has been LACK OF CONFIDENCE & MISTRUST of Politicians, the Economy and the deleterious propaganda waged against the Greeks not only by outsiders, but by its own politicians (like yourself?) who blame everyone and anything to score brownie points. Greece will only go forward if all of us Greeks, especially the Greek professionals from the diaspora like us, to start supporting the Greek Government in power, irrespective of political affiliation, towards a common goal. PRAISE Greece to get confidence back in the streets and the investors at large.

While the attractive measures and change in the government will not attract investment or direct the economy to growth. The major highlights of taxes which could have a double impact on taxation (famously called as Double taxation) and cutting down on pension as said by the author will only test the patience of the citizens. I think the one which the Greece can actually learn from their mistakes is to put up some responsibility on their people to accentuate their workforce towards a modified change in the overall economic policy rather than making false promises and feeling the heat later. And always do remember "wealth creates wealth" hope they can use this bailout programme to push their economy up and run towards a development phase.

Hmmmm.... Greece has chosen to follow a legal path for the moment. Perhaps it is Mr. Varoufakis who has lost illusions.

"X number of Greeks didn't vote..." in either the article or the comments - this doesn't mean anyone can assume that the folks who didn't vote agreed with them, or didn't agree with someone else.

Personally I still think that Wolfgang Schauble offered Greece the best option - they can't legally get debt relief from the ECB while they are in the Eurozone and the IMF won't grant debt relief unless the ECB does. If debt relief is necessary, the necessary next step is an exit from the Eurozone. But that opinion is based on the idea that the rule of law should be supported, which Varoufakis does not agree with.

The world is drowning in all government's debt of $200 trillion. Then, you have to include corporate debt and individual debt to understand the degree of the apocalypse awaiting the WORLD! Greece is just a symptom of a much greater problem. Government's believe they can spend the future TODAY and let future growth pay the bills; however, growth is almost always suppressed because of the MASSIVE debts created by a "live for today" philosophy.

Greece spent 5,7 BEUR on debt service in 2014. Both in terms of % of GDP or % of tax revenues, that is among the lowest - if not the lowest - percentage in Europe. If the IMF did not charge around 3,5% and if private creditors did not cost 5-6%, that debt service would be absolutely minimal. Perhaps Greece should prepay private creditors and renegotiate IMF rates.

All those who are propagating the issue of Greece's debt service as the life-death issue for Greece are misleading the public. The life-death issues for the Greek economy are, among many others: non-performing loans, past-due tax debt to the state, state arrears, bureaucratic hinderances for investment, government actions which shy away foreign investors, etc. etc. JFK would have told the Greeks, particlualry the author of this article: "Ask not what other countries can do for you. Ask what you can do for yourselves!"

Yes, Yanis, your fans certainly believe and accept your analysis. But we need to hear your ideas for the answer. What do you think should be done now.
Why don't you step in and tell your fellow countrymen what they should do to get out of the mess that you have so devastatingly described here and in many other places.
Greece needs you, Europe needs you, THE WORLD needs you. We
have heard your analysis again and again and we accept it. Now we need to hear your proposals for the future.
If you'd like one person's opinion, I think your ideas for pan - European socialist party are pie in the sky. The people with whom you have associated yourself are distinctly marginal politicians in their own countries, and you are a brilliant and charismatic rock star.
Why don't you go back to Greece, tell your fellow countrymen the answers and become the next prime minister? Then you could REALLY tell the Troika - - and the world--what you think of their evil plans.

Dear Yanis, I initially wanted to ignore your article but then I decided that truth must be told. In the 20 September 2015 elections, 9,836,997 Greeks were eligible to vote of which roughly 47.5% (4,672,573) abstained, meaning did not show up. Of the 5,164,424 that voted, Tsipras got roughly 35%, meaning in real terms 1,807,550 or 18% of the total Greek electorate. That is hardly a majority. With only roughly 18% of the votes of the total Greek electorate, this Greek coalition government is illegitimate. These latest Greek elections have been a joke. The results had been to some extent predicted, thus the relative calm in the market place. Tsipras was right to declare on his election night that the” Greek people are the real winners” in these elections because they were clever, they either abstained from voting or kicked the ball back in his court. Tsipras is now the one and only person responsible for the bailouts deals that he himself had accepted or signed up to. The days ahead are going to be very interesting when the austerity measures and high taxes will start to bite. The only difference with these elections is that Greece is now few billions more in debt, lucky creditors. On the Oligarchs, your comrade Tsipras is very much in bed with them. The debate with B. Clinton in NY last week and the person that organised it and the photos with that person in the world press, say it all.

The world economy requires 1.5 Earths for pollution recycling and resources. If everyone on Earth lived like Europeans the world economy would require three Earths. Face this as reality and it is easier to imagine facets of a new story about human culture living in balance with Earth. Is Greece enough below one Earth consumption to give space for other life forms and Earth regeneration?

One commonly suggested palliative in the media world is for governments to borrow money and stimulate growth to create jobs. It is a bizarre corporatist fantasy modeled on a new deal of almost a century ago. Will we grow faster with robot power and need even more Earths to pollute? Will poison gas and radiation tolerant robots be programmed to consume before humans lose the competition and die out? This is the best centrally planned economy corporatism can suggest? Centralize all wealth into one immortal robotic cash machine with robot servants that can live in acid rain at the boiling point of water.

Such a future will be impossible if governments are forbidden to borrow for any reason. No voter approved bond issues. Zero debt and zero borrowing from depreciation, retirement or social security.

Deficit government spending destroys democracy and funds militarization of culture instead of la la land media hype about green jobs and infrastructure. Deficit spending already exists, infrastructure is crumbling and never ending war rages on. These are facts of life.

Discuss democracy as a tool to focus distributed intelligence. The idea of nation is not required for real autonomous democracy. Solve the riddle of prosperity and reaching for the stars at, say, the 1/2 Earth consumption rate. This riddle is beyond the ability of any alliance of hierarchies. Compounding the difficulty of solving the riddle, no individual or hierarchy will be able to either see or fully comprehend the path and goal of distributed human intelligence self-focused using self-evolving information-age real democracy.

Recognize the power of distributed intelligence. It is entangled with accelerating cosmic expansion and traveling at life speed, which may well be faster than the speed of light.

It is a sorry state of affairs. Greece is being asked to pull itself up by its bootstraps but there is a giant with its foot on his head. If I was Greek I would strongly consider simply exiting the Euro and deferring repayment of the entire debt until the country is growing again.

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